Interview by Robin D. Schatz 

March 13 (Bloomberg) — Behavioral economists are a fun- loving bunch, to judge from the intriguing new book “Predictably Irrational: The Hidden Forces That Shape Our Decisions.”

One moment author Dan Ariely is observing how sexually aroused male college students answer questions; the next he’s observing how the Ten Commandments affect the propensity to cheat or watching unsuspecting taste testers happily guzzle vinegar-spiked beer.

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By David Berreby
Published: March 14, 2008

For years, the ideology of free markets bestrode the world, bending politics as well as economics to its core assumption: market forces produce the best solution to any problem. But these days, even Bill Gates says capitalism’s work is “unsatisfactory” for one-third of humanity, and not even Hillary Clinton supports Bill Clinton’s 1990s trade pacts.

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By Russ Juskalian, Special for USA TODAY

Can thinking about an arbitrary number influence how much you’re willing to pay for a computer keyboard, a bottle of wine or a box of chocolates? Apparently so – and the degree of influence may shock you.In Predictably Irrational, Dan Ariely, a professor at Massachusetts Institute of Technology’s Media Laboratory and the Sloan School of Management, put the question to the test in an experiment involving a group of MBA students.

The experiment began with students being asked to write down the last two digits of their Social Security number. When the experiment ended, it revealed a pattern – that students with Social Security numbers ending in the highest-ending digits (80-99) were willing to pay more for items (the wine, the chocolates, etc.) than students with the lowest-ending Social Security numbers (01-20) were willing to pay.
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Anti-economist Dan Ariely says people act in predictably foolish ways

Joseph Brean, National Post Published: Saturday, February 23, 2008

The Martian scientist who descends to Earth to bring fresh perspective to human foibles is a common conceit in everything from anthropology to philosophy, but few scholars ever get to be one.

Dan Ariely, head of behavioural economics at MIT and a fellow of the Institute for Advanced Research at Princeton, came close.

As a teenager in Israel, the accidental explosion of a magnesium flare, used to illuminate battlefields, left him severely burned over 70% of his body, and doomed him to years of painful convalescence.

“I was taken out of the standard life,” he said in an interview yesterday. “I started looking at everything as strange. Why do we hold glasses like this? Why do we give people compliments? Everything was all of a sudden strange. I felt as if I was like a little alien coming and looking at things in a new perspective, and not understanding.”
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Review by Tim Harford
Published: February 23 2008 00:17 | Last updated: February 23 2008 00:17

Not long ago three professors, Daniel Ariely, Elie Ofek and Marco Bertini, set up a stall to hand out free cups of coffee at the Massachusetts Institute of Technology (MIT). In exchange, they asked patrons to tell them whether they liked the roast.

Ariely and his colleagues set up a table of condiments – milk and sugar, but also obscure offerings such as cloves and orange peel. Nobody ever sampled the unusual options, but they turned out to matter a great deal. Some days, the cloves and orange peel were presented in glass containers on a brushed-metal tray, on other days they were dumped in Styrofoam cups with hand-scrawled labels. The presentation of the “condiments-not-taken” turned out to make a big difference as to how MIT students thought the coffee tasted.
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Dan Ariely is an MIT professor who served beer in a brewery and dressed in a waiter’s outfit as part of his research into decision making. A leading behavioral economist, Ariely has heightened abilities to observe what’s going on around him, from tiny details to the big picture. His uncommon findings and their wider applications are presented in “Predictably Irrational: The Hidden Forces that Shape Our Decisions” (HarperCollins). On Sunday, the book debuts on The New York Times Best-Seller list at No. 5.Ariely has written an engaging book of social science with an eclectic, original approach. His work draws on psychology and economics, and he leads readers through the back stories of his research. His personal back story, which he alludes to in the book’s introduction and elaborates on in an interview, is unforgettable.When he speaks of human irrationality, Ariely means the distance from perfection. He looks at why people are usually tempted by two-for-one specials when only one item is needed, might steal an occasional pencil from the office, have trouble turning down second helpings even when dieting or get stuck trying to eliminate possibilities in order to make decisions. (more…)

WHAT WAS I THINKING?The latest reasoning about our irrational ways.  

by Elizabeth Kolbert; FEBRUARY 25, 2008

People make bad decisions, but they make them in systematic ways.

Acouple of months ago, I went on-line to order a book. The book had a list price of twenty-four dollars; Amazon was offering it for eighteen. I clicked to add it to my “shopping cart” and a message popped up on the screen. “Wait!” it admonished me. “Add $7.00 to your order to qualify for FREE Super Saver Shipping!” I was ordering the book for work; still, I hesitated. I thought about whether there were other books that I might need, or want. I couldn’t think of any, so I got up from my desk, went into the living room, and asked my nine-year-old twins. They wanted a Tintin book. Since they already own a large stack of Tintins, it was hard to find one that they didn’t have. They scrolled through the possibilities. After much discussion, they picked a three-in-one volume containing two adventures they had previously read. I clicked it into the shopping cart and checked out. By the time I was done, I had saved The New Yorker $3.99 in shipping charges. Meanwhile, I had cost myself $12.91.

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Making the Same Mistake Twice–And Why a Smart Buy Probably Isn’t
BY EMILY BOBROW | FEBRUARY 15, 2008 | PREDICTABLY IRRATIONAL: THE HIDDEN FORCES THAT SHAPE OUR DECISIONS

I missed the deadline with this book review. Although I had plenty of time to work on it (having pitched it in December), I procrastinated and ultimately pulled an all-nighter to get it in. This sacrificed my personal utility–that is, the amount of satisfaction I have derived from this assignment. Clearly, this was not a very rational thing to do.
Why on earth did I do it? According to Predictably Irrational, a fascinating new book of behavioral economics by Dan Ariely, to dither is human. “We have problems with self-control, related to immediate and delayed gratification,” he writes. We’re inclined to put off work, even if this makes little sense in light of our long-term goals.
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PREDICTABLY IRRATIONAL: The Hidden Forces that Shape Our Decisions    Most people don’t know what they want and don’t know that they want it-until they see it and the reptilian brain kicks in. “Everything is relative,” writes economist Ariely (Behavioral Economics/MIT), “and that’s the point.” His book, a cousin to Freakonomics and The Long Tail, is a spry treatise on how the world works and how we spend our money based on other people’s rules. Knowing that everything is relative, says Ariely, a merchandiser will display a 19-inch television next to 26-inch and 32-inch models, the prices progressing from $210 to $385 to $580, with the point being to sell the nicely profitable, nicely midsize model first. Of course, because we want more relative to what we have, that merchandiser will hope to see us again, now clamoring for the bigger, more expensive model. Thus the economy chugs along, and thus our credit debt deepens. When the time comes to buy that bigger goodie, then we will respond to an “anchor price” that somehow worms its way into our mind. This is the same anchor price that leads us to think that a four-dollar cup of coffee is acceptable, and after doing it once, we do it again, for we now “assume that this is the way you want to spend your money.” Is it? Maybe not, but people are funny creatures of habit, and it is for all of us that Ariely has a brilliant solution to a problem that is very real: “a self-control credit card that would let people restrict their own spending behavior,” categorically and overall, fixing, say, grocery spending at $200 a week and coffee spending at $75 a month. Fat chance of it catching on, he allows: After all, the credit-card companies make $17 billion a year in interest charges. They know our irrational ways, too. Make a point of seeing this book. That way you’ll know you want it, and you will.

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I am delighted to announce the birth of Predictably Irrational.

Predictably Irrational was born after a rather long but mostly painless labor, and so far seems healthy and in good spirit. Predictably Irrational is largely orange and blue, but they tell me that this is normal (or at least acceptable).

At birth it is about 300 pages, and 9 x 6 x 1.1 inches.

They tell me that the next few weeks will be a lot of work around the clock, and sleepless nights. But as the proud father, I am looking forward to this next step.

Dan